会计基础horngrenacct7ch01-2.pptVIP

Accounting and theBusiness Environment Chapter 1 Objective 1 Use accounting vocabulary Importance of Accounting Financial vs. Managerial Accounting Financial Accounting – Information for people outside of the company Managerial Accounting – Information for internal decision makers The Authority Underlying Accounting Ethics Audit Examination of company’s financial situation Performed by independent accountants Sarbanes-Oxley Act Criminal offense to falsify financial statements Public Companies Accounting Oversight Board Monitors work of accountants Types of Business Organizations Proprietorships – A business is owned by a single individual. Partnerships – A business is owned by two or more owners. Corporations – A business is owned by stockholders. Proprietorships What are some advantages? total undivided authority no restrictions on type of business – must be legal What are some disadvantages? unlimited liability limitation on size – fund raising power Partnerships What are some advantages? Corporations What are some advantages? separate legal existence limited liability of stockholders transferability of ownership relatively easy What are some disadvantages? taxes – possible double taxation extensive governmental regulation Characteristics of Businesses Objective 2 Apply accounting concepts and principles GAAP Generally Accepted Accounting Principles Accounting guidelines that govern how accountants measure, process, and communicate financial information Formulated by Financial Accounting Standards Board (FASB) Issues – Statements of Financial Accounting Standards, SFAS and Interpretations. Generally AcceptedAccounting Principles What is the primary objective of financial reporting? Entity Concept The Entity Concept Example Assume that John decides to open up a gas station and coffee shop. The gas station made $250,000 in profits, while the coffee shop lost $50,000. The Entity Concept Example How much money did John make? At a first glance, we would a